We have introduced transgenes into rats with a view to defining genomic regions that mediate the cell-specific and physiological regulation of the vasopressin gene. These transgenes consist of the rat vasopressin structural gene with a reporter inserted into exon III, flanked by different lengths of upstream and downstream sequences. 11-VCAT-3 is flanked by 11 kbp of upstream sequences and 3 kbp of downstream sequences. The previously described 5-VCAT-3 is flanked by 5 kbp of upstream and 3 kbp of downstream sequences. 3-VCAT-3 has 3 kbp of upstream and 3 kbp of downstream sequences, and 3-VCAT-0.2 is flanked by 3 kbp of upstream and 0.2 kbp of downstream sequences. All four transgenes elicit the same expression patterns; low basal expression is seen in the magnocellular supraoptic and paraventricular nuclei, and is negligible in the suprachiasmatic nucleus. Expression increases markedly in vasopressin magnocellular cells following dehydration. The sequences responsible for the cell-specific expression and physiological regulation of our transgenes thus reside within the confines of the smallest construct studied, 3-VCAT-0.2.